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Trafalgar Square

Sales of GBP10m-plus London properties increase tenfold

Residential property prices in England and Wales rose marginally by 2.27 per cent across the year, bringing the average price to GBP238,293, according to London Central Portfolio’s (LCP) analysis of the latest Land Registry data.

Prices in Prime London Central (PLC) rose 14.1 per cent to finish 2012 at GBP1,359,739, while the number of sales of London’s super prime properties (GBP10m+) increased 10 fold.

The number of sales in England and Wales between GBP2m and GBP5m increased a staggering 71 per cent, while the most expensive sale in PLC in Q4 was a house in Farm Street, Mayfair at GBP28,134,500. High value sales in Q4 were also registered in London Central’s most prestigious developments – One Hyde Park, 199 Knightsbridge and The Lancasters.

Naomi Heaton, chief executive of London Central Portfolio says: “The stagnant performance for the country is another disappointing economic indicator for the Government. With prices approaching the one per cent Stamp Duty threshold of GBP250,000, it is now more important than ever that the Chancellor revisits this at the next Budget and raises the ceiling, or risks further suppression of the market.
“The 14 per cent increase in average prices in Prime London Central (PLC) over the year underlines its continued global appeal despite the new property taxes unveiled at the last Budget. The Chancellor increased Stamp Duty to 15 per cent for individuals buying through a corporate vehicle and announced a consultation process on an annual levy of up to GBP140,000 per annum and a new capital gains tax.
“The ensuing uncertainty has now been put to bed as the picture has become clearer and with the announcement that it will not apply to any genuine bone fide businesses such as development or buy-to-let investments. This is already providing another boost to the market.
“An element of the price increase, however, is undoubtedly due to the fact that some buyers are now choosing to avoid the new tax measures by buying in their own personal names, in-line with the Chancellor’s declared intention.
“It has been widely reported that the sale of properties in newly created corporate wrappers, which enabled buyers to avoid paying Stamp Duty, were predominantly in new developments. It is therefore interesting to note that of the 20 properties in PLC over GBP10m registered by Land Registry this quarter as being bought in personal names three were in London’s most prestigious new developments: One Hyde Park - GBP13,000,000; The Lancasters - GBP13,650,000; and 199 The Knightsbridge - GBP14,100,000

“This has undoubtedly increased the average price reported by Land Registry for flats and maisonettes, which is up 26 per cent over the same time last year.
“With a significant increase super prime property sales in PLC from two in Q4 2011 to 20 in Q4 2012, it would appear that the Chancellor’s objective for companies to de-envelope is working. Whilst the increase in average prices recorded by Land Registry appears to be good news for the property market, this data needs to be scrutinised with great care. The Land Registry figures will no longer be comparing ‘apples with apples’ as average prices will increase disproportionately if people transfer high-end properties out of corporate wrappers or choose to come into the market in their own name. The 10 fold increase in sales over GBP10m+ equates to a value of almost GBP1/3bn compared with GBP31m the year before.
“PLC was not the only place to see high value sales. Camden registered four sales (three in Regents Park) over GBP10m. The most expensive purchase outside London, recorded in Land Registry, was in Bicester, Oxford. It sold for GBP23,495,000.
“This quarter has also witnessed sales in England and Wales between GBP2m and GBP5m making a sharp come back from the shock of the increase in Stamp Duty from five per cent to seven per cent in the last Budget. Transactions increased by 71 per cent over the last quarter, as buyers, who were holding back, came to terms with the increased cost of moving. The Chancellor would be well advised to reflect on this, if an increase in Stamp Duty from four per cent to five per cent over GBP500,000 and five per cent to six per cent over GBP1m is on the agenda. It is very likely that these buyers will find it much more difficult to pull together the increased Stamp Duty costs causing a longer term dampener on the market.”

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